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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
MCJ Corporate Profile
MCJ Co., Ltd.23/07/2018Investor Meeting, Hong Kong
Corporate introduction and financial overview
MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Disclaimer
This presentation may contain forward-looking statements which are inherently difficult to predict, hence actual result could differ materially for a variety of reasons, both positive and negative, including but not limited to such factors as change in economic conditions, customer spending and fluctuations in foreign exchange rate and so on.
In making these statements, we rely on assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results.
Hence, we caution readers not to place undue reliance on forward-looking statements.
We undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors that affect the subject of these statements, except where we are expressly required to do so by law.
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Agenda
Overview of MCJ Group
Company Vision and Future Direction; Mid- term Management Plan FY2017.3 - 2019.3
Stock-related information
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Overview of MCJ Group
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Establishment
Aug, 1998Over 124billion JPY
Business Domain
PC related business Comprehensive entertainment business
Generated record sale and profit for 2 consecutive years since FY2017.3
Bourse
Tokyo Stock Exchange
2nd section
Trading Unit
86.1billion JPY*2
100shares
2,020*1
Market Cap
Group Companies
19 in total(consolidated subsidiaries)
In Japan,Europeand South East Asia
# of Employees Annual Turnover
Ticker code: 6670
Overview of MCJ group
*1) at the end of March 2018
*2) As of end of June 2018
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Our major subsidiaries
Domestic PC business
Overseas PC business Monitors in Europe Repair service of IT
devices in SEA
Internet-coffee
PC and peripherals PC, peripherals, and other IT gadgets
Distributor of IT products
Operator of Internet Coffee chain
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Chairman & CEO
President & COO
Joined Takashimaya Clothing Store Co., Ltd. (name changed to Takashima Co., Ltd. and then to Mouse Computer Japan Co., Ltd. before being acquired by MCJ Co., Ltd.)President & CEO, Takashimaya Clothing Store Co., Ltd. (name changed to Takashima Co., Ltd. and then to Mouse Computer Japan Co., Ltd. before being acquired by MCJ Co., Ltd.)President & CEO, MCJ Ltd. (currently MCJ Co., Ltd.) Director, Synnex Co., Ltd. (currently Tekwind Co., Ltd.)Director, Arosystem Co., Ltd. (currently UNIT.COM INC.)Chairman & CEO, MCJ Co., Ltd. Chairman & Director, MCJ Co., Ltd. Director, Mouse Computer Co., Ltd. Chairman & President & CEO, MCJ Co., Ltd. President & CEO, UNIT.COM INC.President & CEO, Iscorporation, Co., Ltd. (currently aprecio Co., Ltd.) Director, UNIT.COM INC. (to present)Director, aprecio Co., Ltd. (to present)Chairman & CEO, MCJ Co., Ltd. (to present)
April 1993
May 1996
Aug.1998Sep 2005
March2006July 2006Oct. 2006June. 2008Nov. 2012Aug. 2013Jan. 2017
April 2017
Joined GDH, Co., Ltd. Joined MCJ, Co., Ltd.Manager, Finance and Accounting Department, MCJ, Co., Ltd.Executive Officer, Management Planning Department, MCJ, Co., Ltd. Manager, Industrial Growth Platform, Inc. Executive Officer, PIA CorporationDirector, Industrial Growth Platform, Inc.Senior Specialist, Inspection Bureau of Financial Services AgencyPrincipal, Industrial Growth Platform, Inc.Executive Officer, President’s Office, MCJ, Co., Ltd.Director, Head of Business Development & IR, MCJ, Co., Ltd. President & COO, MCJ, Co., Ltd.(to present)
July 2001Sep. 2002June 2004April 2005Aug.2007June 2008July 2011Oct. 2013Oct. 2014March 2016June 2016April 2017
Yuji Takashima
Motoyasu Yasui
Leadership team» Our Board consists of 7 members, of which 3 are outside directors
Management profile
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Expansion through a series of M&As
Listed on TSE 2nd
section
First-time company vision and future strategy has announced as mid-term management plan.First dividend payout
Sales over 100billion JPY
Established as Mouse Computer Japan
IPO to TSE MOTHERS section
Adopted holding structureMCJ as holding company was established through company split
Path to value creation
Our history
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Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Created integrated value chain associated with PC business in Japan.
First public release of company vision and future strategy as mid-term management plan.
Business expansion through aggressive M&As
2005April~
2016May~
Acquisition of iiyama ; sales
channel in Europe and manufacturing factory in Japan.
2006
Acquisition of TEKWIND(then
SYNNEX JAPAN) ; global purchase
network.
2005Acquisition of two companies to be
merged into Unitcom ; nationwide
retail network.
2007 Announcement to acquire R-Logic
international: penetrate into Asian
market.
2017
Expansion trajectory
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MC
JM
CJ
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What makes us unique
We differentiate ourselves from other PC makers by target focus and business model
Product
Primarily focusing on niche market
− Gaming and other specialised-PCs
Balance
− Price
− Quality and spec
− Repair and after support
Lean management and quick action
− Time to Market
− One of the kind PCs to each user
− Low-cost operation
Feature Uniqueness
Business model
Recently penetrating into more mass-market
− Increasing brand awareness− Attractive products offering
BTO manufacturing model
Comprehensive Value chain
− From R&D, manufacturing to after service.
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JM
CJ
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Our product lineup 1/2) : specialised PCs
Creator PC Gaming PC
Trading PC For Deep learning
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Our product lineup 2/2) : ordinary PCs
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JM
CJ
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Domestic PC market, the number of units sold
( in thousands )
Laptop PC sales overtook that of
desktop PCs
Launch of Windows8.1
MS ceased providing Windows XP support
Release of Windows8
Toshiba announced to sell its PC business to SHARP/ Foxconn
SONNYspun off its
PC business
SHARPWithdrew from PC business
PC business is a declining business as a whole, while many has withdrew or scale back their business
Fujitsu announced to sell majority stake of its PC
business to Lenovo
NEC announced to majority stake of its
PC business to Lenovo
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
Market environment: Opportunity for growth
As our market share is still small, domestic PC market still is a huge market to cultivate for us.
» Opportunity to growth by increasing market share; continue to strengthen brand awareness and development of competitive products.
Shrinking market does not necessary mean there is no opportunity for growth.
» High-spec PC market especially gaming PC is a case in point.
» Steady growth driven, in part, by market growth can be achieved.
(Unit)
Source; JITA
Year 2017Domestic
PC market share
The number of PC unit sold in Japan
Source; MM RI
MS ceased support for
Windows XP
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Our value chain
Overview of our value chain
R&D Purchasing Sales Manufacturing After service
• Call Centre; open 24 hours a day, 365 days a year.
• Repair Centre in Saitama
• One of the biggest EC site for IT gadgets.
• around 80 stores.• Vast network with
electronics retailers and resellers, corporate customers
• Multiple manufacturing factories at east and west of Japan with flexible capacities.
• Strong relationship with MS, intel and other global suppliers.
• Mark to market development.
• First to launch many innovative gadget.
• From PC, tablet, smartphone to peripheral gadgets.
Domestic and integrated value chain » Adopting BTO manufacturing model justifies domestic manufacturing;
quality control, delivery time, transportation cost, and etc.
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JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Extensive sales channel
Our domestic sales channel covers entire B to C and B to B market
Direct channel
Indirectchannel
EC websiteDirect shop
Electronics retailers
OEM to E-Rs
Consumersin general
・ EC website operated by Mouse ・ more than 70 stores.・ all the major E-Rs in Japan.・ Providing OEM products
To B Direct channel
Indirectchannel
DistributersDirect salesCompanies in general and
other entitles
・ Sales by our sales employees to many kinds of entities.・ Sales via nation-wide IT distributers and EC site.
Overseas marketiiyama
cooperate and individual users
In EUDistributers・Sales via distributers.
To C
R-logicIn 5 countries all across SEA
Subcontract from IT makers
・Subcontract from IT device makers and etc.
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Hokkaido regionHokkaido
Tohoku regionMiyagi, Yamagata, Fukushima prefecture
Kanto regionTokyo, Saitama, Tochigi prefecture
Kinki regionOsaka, Hyogo, Kyoto, Shiga, Nara, Wakayama prefecture
Shikoku regionTokushima, Kagawa, Ehime prefecture
Okinawa regionOkinawa prefecture
Chubu regionNiigata, Toyama, Ishikawa, Fukui, Nagano, Yamanashi prefecture
Chugoku regionTottori, Shimane, Okayama, Hiroshima. Yamaguchi prefecture
Kyushu regionFukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima prefecture
More than 70 stores nationwide, in-house factories in East and West Japan…In-house factory…Repair centre…Call centre
Tokai regionAichi, Mie, Gifu prefecture
Our nationwide business network
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JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2014.3 2015.3 2016.3 2017.3 2018.3
MCJ group Domestic PC ( JAITA )
Unit sold, as compared to market trend
Continue to outperform market trend, as mass marketing contributed significantly, in addition to demand increase from niche market
*The above graph compares actual results for each quarter (accounting period) with the same period of the previous year.
Launch of Windows 8.1
MS ceased Windows XP
support
Release of Windows 10
Initiation of nationwide
TVCM
First year of mid-term management plan
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
102,889 103,288 108,727 124,544 131,100
5,068 5,167
7,463 8,504
9,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
FY2015.3 FY2016.3 FY2017.3 FY2018.3 FY2019.3;estimated
Sales OP
Expect to achieve all-time high sale and profit in FY2019.3; 3 consecutive years after release of Mid-term plan
Financial result and forecast for FY2019.3
First year of Mid-term plan
(in millions, JPY)
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Financial overview of major group companies
PC and PC peripherals Integrated sales channels including E commerce.
Mass marketing × competitive products× better after support
PC, PC peripherals and other IT devices. Nationwide retail network with more than 70 stores.
Focus more on EC sales and corporate customers, while undertaking business restructure of retail business.
A variety of IT devices and products Distributor; to electronic retailers and
corporate customersFocus more on better margin products and sales channel.
Development and sales of monitors Headquartered and operates in Europe
Focus on growing product-lines and penetrate into new market.
Net sales 27,468 30,299 10.3%
Operating profit 559 750 34.1%
% ChangeIn millions, JPY FY2017.3 FY2018.3
Net sales 32,615 36,665 12.4%
Operating profit 2,270 1,952 △14.0%
% ChangeIn millions, JPY FY2017.3 FY2018.3
Net sales 33,809 30,815 △8.9%
Operating profit 665 760 14.2%
% ChangeIn millions, JPY FY2017.3 FY2018.3
Net sales 22,633 28,006 23.7%
Operating profit 3,627 4,208 16.0%
% ChangeIn millions, JPY FY2017.3 FY2018.3
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Company Vision and Future Direction; Mid-termManagement planFY2017.3 – 2019.3
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
synergies
Hardware Expand into other types of hardware
Contents and ServiceVenture into related business to go with hardware
Hardwar continue to exist irrespective of its form as a meant to connect to information.
Hardware as a whole is a growing business.
# Diversity as means to access to and share information, and in user needs.
More stable business than hardware. More growth potential than hardware.
Direction in our vision
Means to achieve
Expand into hardware other than PC, tablets, etc.
Wearable, VR, AR, drone, IoT… Continue to seek innovation from hardware area
Venture into services that can be related to hardware
Contents for consumer, software for corporate… Seek innovation from service area
Development within group, using own resources.Collaborate more with Start-ups Active investment to start-ups, along with
providing business support using our value chain
Alliance with, and/or equity investment to start-ups
Utilise M&As to expand our business domain New M&A policy in accordance with the vision
Background
# Hardware and related services are compensate for each other as one business
Corporate vision and future direction
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CJ
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Current mid term plan is positioned as period to build management foundation for achieving long-term vision; investment period for future growth.
Ⅰ. 1st year Ⅱ. 2nd – 3rd year Ⅲ. Following period
Preparation period forsubsequent years
Setting clear direction by composing long term vison.
Setting execution policy and method・in accordance with the plan.
Focus on team building and execution.
~ 2017.3 ~ 2019.3 ~ beyond
Execution period on mid-term plan
Organic growth to diversify the types of hardware to deal with.
Actual execution of M&As and alliance strategy.
Focus on building foundation to achieve long-term vision..
Period of continuous execution to achieve long-term vision
To be express in next mid-term plan.
・・・
Step1 Step2 Step3Preparation Execution Realisation
Current mid-term plan
Planed path toward achieving Mid- term plan
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CJ
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KPI : actual vs target
Actual vs target
FY2018.3
*1 initial target was above 20%, when the mid-term plan was originally announced
Target Actual
KPI Posted record high sales for 2 consecutive years Also posted record high operating and other profit for 2 consecutive
years
Growth Strategy
Continue to spend Ad expense for mass marketing, business restructure, and etc. for sales and profit expansion.
Development and sales of IT devices other than PC through in-house development and alliance with start-ups, etc.
M&A: R-logic, repair service provider for IT products in South East Asia
6.8%Around 5%OP ratio
17.5%Above 10%ROIC
18.6%Above 10%ROE
30.1%Above 30%*1Payout ratio
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MC
JM
CJ
Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Our intention for this ongoing Mid-term plan
×
Mid- term Plan Summery Our Intention
To build up profitability in our current business
» Seek increase both in sales and profit.
» Seek to achieve increased profit compared to previous year despite the business investment.
×
Aggressively making investment to create and sustain future growth.
» Seek to accumulate investment fund through increased profitability mentioned above.
» Seek to obtain the source for future income through investment.
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Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Summary of action and actual result;FY2018.3
B/S• More shareholder return• Better capital efficiency
through portfolio management
• Monitor ROIC and ROE as KPI
P/L• Profit enhancement activity
throughout the group• Sales Growth*:20.6%• Sales Profit Ratio*:64.6%
Action along with mid-term plan• Strategic action as set in
the plan• Mass marketing• Penetrate in to SEA• Start-Up investment
Increase profit / capital efficiency × Investment for future with increased profit
*% increase compared to FY2016.3
Sales
Operating Profit
OP Ratio
ROIC
ROE
FY2016.3 FY2017.3 FY2018.3
103,288 million 108,727 million 124,544 million
5,167 million 7,463 million 8,504 million
5.0% 6.9% 6.8%
11.6% 17.4% 17.5%
13.0% 19.1% 18.6%Payout Ratio 20.5% 25.1% 30.1%
All KPIs exceeded the target ratio
Record high sales and profit; 2 consecutive years
(unit: JPY)
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M&A and start-up investment direction
M&As account for significant part as a way to achieve our long-term vision M&As will be conducted within the range of FCF and cash on hand. Opportunities for M&As are considered with clear strategic business synergies.
2019.32016.3 2017.3
【Present theme】Preparation for
exclusion
【Mid-term theme】Cultivating new market × Broaden the types of
product
Set new policy. Reinforce M&A
team Gain investment
track record.
Mid –term Plan2nd yearFirst year
【Long-term theme】Means to achieve long-term theme
beyond
Global business value chainM&A
VB Mainly on hardware start-ups and related contents and services providers
Theme for next mid-term management plan
Broaden the types of hardware to deal with
Penetrate intocontents / service
Mid –term Plan3rd year2018.3
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Start-up investment; examples
Investment track record in accordance with the management plan.
Our start up investment record, examples
Hardware Middleware/ infrastructure
Contents and others
To B
To C
Ouka-Ichimon
Developer of VR game.
Nain
Developer of “hearable
device”, with voice
recognition
Holo LabSolution provider and
software developer using HoloLens and xR-
technology, co-investment with Softbank
immersv
US-based Ad platform
provider for VR and mobile 360
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Transaction was conducted with the aim to penetrate into Asian market in the future» To strengthen our brand image with splendid support function 《differentiation by customer support》» Repair and support function is integral part fro selling hardware, yet difficult to start from scratch as it
requires tech-expertise and difficult to generate profit if own it in-house 《avoid fixed cost associated with repair function, while owing necessary function》
present
Penetrate into Asia market as a Group, and support R-logic to expand
its business
Group companies to penetrate into Asia. Support alliance
companies go into the region
» Acquisition of infrastructure to penetrate into Asia market
» Conduct M&A to own repair function, which is tech-centre and requires scale for making profit
» Support R-logic for its business and geographical expansion.
» Install proper governance and admin-function into R-logic
Mid term~Short term~
Collaboration in purchase and busienss
Long term~
» Collaboration to create global supply chain
» Mutually setting up sales channels
» Collaboration in geographical expansion
» ・・・
» R-logic to assist group companies for its future Asia operation
» Utilise repair function to build brand image × avoid fixed cost
×» Position R-logic as a support
function for other Japanese hardware companies, to assist others from repair and support function.
Image for future direction
M&A; R-logic International Pte Ltd
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Significant KPIs for management
Setting KPIs that can be apply both to existing and new business.
Numbers indicate floor percentage, taking active M&As into consideration.
# Focus on profit management of each company and business portfolio management.
Better shareholders return along with more IR activity.
Payout ratio based on stable growth in mind.
KPI
Notes to KPI
Operating Profit ratio:around 5%ROE:Above 10%ROIC:Above 10%
Target divided payout ratio:Above25%(originally, target was set to be more than 20% but was upwardly revised.)
OP ratio:target ratio to balance both growth and profitability as sound entity to sustain future growth.
ROE/ROIC:set floor rate considering tentative decline as a result of planed M&As and etc.
FCF to be used mainly on M&As, return toshareholders and equity reserve on B/S.
Continue to strengthen shareholder return based on future financial projection.
Back ground
# Position shareholder return as one of priorities and set stable shareholder return method.
Management KPI Shareholder Return
Financial policy and KPIs for the management
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Stock related information
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MC
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Copyright(C) 2018 MCJ Co.,Ltd. All rights reserved.
Continuous increase of dividend payout ratio is clearly stated on our Mid-term Management Plan.
» As to the FY2018.3, dividend for a share became almost tripled, as a result of increase in payout ratio, along with strong financial result.
» Payout ratio for FY2019.3 is expected to be 30% as of now.
Return to shareholders: Dividend
Planed Payout Ratio for FY2019.3 at this moment is 30%, up 10% compared to FY2016.3, the year before mid-term management plan.
Before Stock split After Stock split
Plan Reference Plan
FY2015.3 FY2016.3 FY2017.3 FY2018.3 FY2019.3 2019.3
Dividendper share 10 13 26 36 36.72 18.36
Dividendpayout ratio 18.6% 20.5% 25.1% 30.1% 30.0% 30.0%
Actual
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Trading Volume Stock
Announce of Mid-tem plan
FY2018
Historical stock price and trading volume
FY2016.1~2018.5 stock price / trading volume (JPY)(volume)
FY2016 FY2017- 32 -
MC
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0
0.5
1
1.5
2
2.5
3
Nikkei 1st section 2nd section MCJ
0
2
4
6
8
10
12
14
16
Nikkei 1st section 2nd section MCJ
Major market indicator
(times) (%)
Source) The Nikkei( https://www.nikkei.com/markets/kabu/japanidx )
PER compared to market average Dividend yield ratio compared to market average
Attractive valuation considering our growth potential and higher than average dividend yield ratio.
Figures above represent previous fiscal year Figures above represent previous fiscal year
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Summary
Steady growth by identifying the niche market and by aggressive marketing, even though the PC industry as a whole is stagnant.
Clear growth strategy stated on company vision and future direction; “Hardware × Contents・Service”
Earn stable profit both in domestic and overseas market.
Proven financial track record with strong sales and profit growth.
Strong financial performance, attractive valuation, and active returns to shareholders
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